£250 or £70 to extend the loan period for 30 months, or return to employer at no cost.
That's what the official email says.
Bit of a turn around from the £10 last time.
There's gonna be a lot of unhappy bunnies.
Well it was good while it lasted.
And n I'm not complaining, because I've had more thant fair share of benefit from the scheme.
I for one am glad that folk can no longer rip the arse out of this scheme.
I'm waiting to see what these companies are gonna do with a lot of 12-month old bikes......
druidh - Member
I'm waiting to see what these companies are gonna do with a lot of 12-month old bikes......POSTED 2 MINUTES AGO # REPORT-POST
The email says that Cyclescheme now own the bike, not my employer.
I assume they've worked out a deal with the companies to take them off their hands.
* checks classifieds *
Your end of hire options with Cyclescheme
Cyclescheme Ltd is pleased to confirm that you have now completed the hire period for the cycle to work scheme provided by your employer. Your employer has opted to give you the opportunity to buy the Equipment you have hired and has transferred the ownership of the Equipment to us so that we may handle the purchase arrangements.
Without completing one of the options listed below by 03/12/2010 this would result in a benefit in kind that should be declared on a P11D which may result in any tax savings, made during the hire period, being disallowed. Furthermore, you will be responsible to pay Cyclescheme Ltd any costs that we reasonably incur in recovering the bicycle from you.
You now have 3 options under the end of hire process:
Purchase the Equipment by paying the market value.
Extend the use period by signing an Extended Use Agreement with Cyclescheme Ltd.
Return the bicycle to Cyclescheme Ltd.
For further details of each option please click on the relevant button below:
just pay the £70 quid - keep it for the extended period then pay the small end fee to but the bike - prob about 2% of bikes value - still end up with a cheap bike
Sounds like they've turned what was a good scheme to get more people riding bikes more often into a scheme to rip off the general public by a government quango! I thought the whole point of the cycle scheme was that the company owned the bike after 12 month hire period and that they could then sell it to the employee for a nominal fee at their discretion. You're telling me that after 12 months now, cycle scheme still own the bike? So it has now become a contract hire with a large balloon payment at the end?
Someone's making a tidy profit somewhere now, VAT has not been paid on the bike cos it's a company purchase, you pay out of your pre tax wages in order to get the benefit there, so adding a lump sum of £250 on the end... Sounds like you might as well have not bothered in the first place, join your local MTB club and most LBS will give 10-15% discount, and you'll more than likely get 6-12 months interest free if you ask...
mboy - Member
Sounds like they've turned what was a good scheme to get more people riding bikes more often into a scheme to rip off the general public by a government quango! I thought the whole point of the cycle scheme was that the company owned the bike after 12 month hire period and that they could then sell it to the employee for a nominal fee at their discretion. You're telling me that after 12 months now, cycle scheme still own the bike? So it has now become a contract hire with [b]a large balloon payment at the end?[/b]
Only if you elect not to retain the use of the bike for a further three years. It's not like it'll be completely worn out after 12 months, so if you are using it for "cycling to work" there's no downside.
It didn't take Cyclescheme long to figure out how to make more money out of it.
Cyclescheme always made money from it. This latest change is only due to a clarification of BiK from HMRC.
I got my end of contract letter from bae systems. They are gonna make up the difference so 5% on my crush still :D. Dont know what will happen next year.
shitty outcome that will sink the cyclescheme IMO. you may as well just buy a bike on 0% finance at the start of the year. look forward to seeing what my firm does....
Cracking, I signed up knowing it would be 5% at the end the same as the last time and now in 10 months it'll be a lot more. the death knell of the scheme has been sounded.
I had to pay 30 quid at the end of 18 months, 1k value. I assume they have transferred ownership to me at zero cost, and i've paid the tax on the 21% final value fee.
"If the employee pays less than market value, the difference will be taxable as employment income."
Spud - Member
Cracking, I signed up [s]knowing[/s] assuming it would be 5% at the end the same as the last time and now in 10 months it'll be a lot more. the death knell of the scheme has been sounded.
T.FIFY
I signed up knowing I'd missed the boat for the 5% thing. Worked out I'd still be ahead at 25% but not by much really- the main attraction for me was paying in instalments. I wanted a Roadrat which wasn't readily available to me on finance otherwise I'd probably have just done that.
Can't remember the exact figures but I will pay 12.50 to keep the bike and then tax on the difference between that and 25%. So I end up with a 1000 pound bike for a little over 700. Plus I got it interest free over a year. I'm happy.
I will pay 12.50 to keep the bike and then tax on the difference between that and 25%.
Sounds about right to me, although I thought National Insurance was payable too.
Sounds like they've turned what was a good scheme to get more people riding bikes more often into a scheme to rip off the general public by a government quango!
Quango? What quango?
Cyclescheme is just an ordinary limited company providing a convenient way for employers to get the benefits of the Government's Cycle to Work scheme.
You don't have to use Cyclescheme to get the tax benefits, they just make it easier, for a fee (collected from the retailer).
Much of the original value of the scheme was down to the use of a nominal value for the bike after 12 months, rather than a realistic market value. HMRC recently cracked down on this and issued guidance about what it considers "realistic" for a 12 month old bike. The solution to this is to not buy the bike for another couple of years, by which time its value will have depreciated to something much closer to the nominal value you used to be able to get away with.
It seems to me that Cyclescheme are acting perfectly reasonably by offering the option to extend. They can't sell to you at below market value.
It does sound like Cyclescheme would make a nice profit if you take the "market value" option, as the hire payments will have been based on being able to use a nominal value at the end, but I'm not sure what you'd expect them to do given that HMRC changed the guidance half way through the term of the period.
I am a little annoyed. I am coming up to the end of my loan period in April.
I am fairly sure the agreement I signed quoted 5% as a usual fee at the end. How like the wretched politicians to move the goal posts and apply retrospective taxes.
If extending the loan period to 30 months are there any further hire payments to be made? DO they quote an expected purchase price for the end of this period?
uphillcursing - Member
I am a little annoyed. I am coming up to the end of my loan period in April.
I am fairly sure the agreement I signed quoted 5% as a usual fee at the end. How like the wretched politicians to move the goal posts and apply retrospective taxes.If extending the loan period to 30 months are there any further hire payments to be made? DO they quote an expected purchase price for the end of this period?
No one "moved the goal posts" - it was always the case that fair market value should be applied at the end. It's just that there were no guidelines for this.
As for the contract extension bit, there are no additional monthly payments and the FMV will be a lot less the longer you keep it.
I am fairly sure the agreement I signed quoted 5% as a usual fee at the end.
If it did then it broke the rules, they've always said they cannot specify the final price in advance or it alters the sort of scheme it is.
I don't think it's a shame really, I'm sure those who benefitted most weren't the target market - higher rate tax buyers buying a grands worth of bike each year. Not to mention the fact that those who could most use this sort of help, e.g. minimum wage workers, aren't even eligible for the scheme.
I think the wording was "typically 5-10%"
Currently rummaging through documents to corroborate this. I have been known to be wrong in the past though!
Surrounded By Zulus - MemberI for one am glad that folk can no longer rip the arse out of this scheme.
I concur.
There has been a MASSIVE drop in cyclescheme business with us since things were clarified.
It is still suprising though how many people mis-read the terms and conditions.
It is a fantastic scheme to allow effectively 12 months interest free credit and a wee discount to buy a bike for riding to work on.
Not good for a weekend toy.
Feel a bit sorry for the chaps midway through the scheme to suddenly find out they will be collared for more than they expected. Should only apply to new contracts taken out not ones in progress imo.
Cheaper to buy last years model than use C2W for me now. Anyway I'm kind of happy it's helped make my mind up on a road bike.
I still think there is a bit of scope for confusion - especially if you spent £200-300 on clothes/helmets as part of the C2W. 1 year old well used cycle shorts won't be worth anything...but they seem to treat the whole value of the voucher as if it was all spent on a bike.
DT78 - MemberFeel a bit sorry for the chaps midway through the scheme to suddenly find out they will be collared for more than they expected. Should only apply to new contracts taken out not ones in progress imo.
Cheaper to buy last years model than use C2W for me now. Anyway I'm kind of happy it's helped make my mind up on a road bike.
I still think there is a bit of scope for confusion - especially if you spent £200-300 on clothes/helmets as part of the C2W. 1 year old well used cycle shorts won't be worth anything...but they seem to treat the whole value of the voucher as if it was all spent on a bike.
Thats the rub. As a newbie I got the whole shebang on the scheme. Bike, head potty, etc, etc.
Foolish? maybe. Still, means I got out on a bike for the first time in 25 years.
It was KNOWING and not assuming. I paid 5% last time round and my paperwork said typically 5%. All the staff I know have also paid this. Had I known I wouldn't have bothered.
Who determines the FMV then? Surely I can ask the LBS to quote was this might be?
Surely I can ask the LBS to quote was this might be?
How likely is it to be less than 25% of the purchase price 1 year ago?
Depends on how much use it's had etc surely? Our scheme is over 18 months too.
I used to work in leasing
Laptops for students, bike for workers etc etc were great till everyone got mugged by the end of lease payment....
Classic leasing strategy, offer the carrot then shag them on the end of lease ballooon payment.
A company i (may have) used to work for made made thousands a month purely by the payments from companies that had firgotten to cancel their leases.....
I for one am glad that folk can no longer rip the arse out of this scheme.
Why are you glad about that? Were you excluded from the scheme in some way?
it's not a lease...
Depends on how much use it's had etc surely?
yes. From http://www.hmrc.gov.uk/manuals/eimanual/eim21667a.htm ....
The valuation table
Age of cycle
Acceptable disposal value percentage
Original price of the cycle
less than £500 £500+
1 year 18% 25%
18 months 16% 21%
2 years 13% 17%
3 years 8% 12%
4 years 3% 7%
5 years Negligible 2%
6 years & over Negligible Negligible
I for one am glad that folk can no longer rip the arse out of this scheme.
Why are you glad about that? Were you excluded from the scheme in some way?
I am as I am self employed and was not able to join in the cheap bike not to cycle to work on scheme
Why are you glad about that? Were you excluded from the scheme in some way?
I suspect driving instructors have little need to cycle to work.
And students - well, they just don't work do they.
Never mind eh George 😆
Easy. Kick the f*** out of it and give it back. Everyone should do this.
1: most info on the web suggests 5% fvf, last years scheme used a 5% fvf,(well,mine did) surely this sets a legal precedent?
2: how can HMRC change significantly an agreement you are legally locked into?
bit unfair to apply this retrospectivly
Easy. Kick the f*** out of it and give it back. Everyone should do this.
But your responsible for the maintenance and safety of the bike, if its bust when you give it back you can almost certainly expect a nice big bill for the repair :0)
rbrstr
Because the agreement states fair market price at the end of the loan period.
1: most info on the web suggests 5% fvf, last years scheme used a 5% fvf,(well,mine did) surely this sets a legal precedent?
2: how can HMRC change significantly an agreement you are legally locked into?bit unfair to apply this retrospectivly
1. Most info on the web says 5% but qualifies this term be saying fair market value (is your bike worth 5% after one year?)
2. HMRC are not changing anything, they gave out a clarification so employers and employees were not putting themselves in a position of tax evasion, the agreement you are legally locked into mentions nothing about the final term, it would have only mentioned you would be given the option buying the bike (at fair market value), returning it, or possibly keeping it for another 12-18 months etc. Nowhere would/should it have said 5%.
If you have paid 5% before then lucky you, tho if you ever get investigated for tax evasion this might come back to haunt you, now there is guidance you will be aware you probably didnt pay enough tax at the end of your previous contract and should be contacting the tax office to pay then the difference :0)
[quote=uphillcursing]Thats the rub. As a newbie I got the whole shebang on the scheme. Bike, head potty, etc, etc.
[quote=HMRC]
In calculating the original price of the cycle, include safety equipment fitted to the cycle (such as lights and bells) but not safety equipment which would be worn by the cyclist (such as helmets or reflective clothing). Where used regularly for commuting and/or travel between workplaces, safety equipment worn by the cyclist is likely to have a market value that is lower than the table percentages for a cycle and cycle-based safety equipment.
So, the 25% need only apply to the bike and bell. Clothes/helmet worn for a year of commuting are going to be pretty close to negligible value, I would think.
[quote=Spud]
Who determines the FMV then? Surely I can ask the LBS to quote was this might be?
Yes, you can. The list of rates that HMRC provide are actually a list of values at which they will not question the valuation. You can go lower, by HMRC may ask for evidence of why a lower valuation is appropriate.
Problem is, it's down to the scheme operators to offer to sell you the bike - you have no right to buy it. So in the case of Cyclescheme, it's likely to be too much hassle for them to make you any offer that is less than the HMRC guideline. If you do it directly with your employer, and you really believe it's worth less than the guideline amount, you may be able to suggest a lower price.
my agreement says nothing about an FMV, nor did last years.fact.i've dug out the paperwork and re-read it.i'd never even heard that term till reading this thread
it only mentions a transfer of ownership fee at the end of the scheme. at the end of last years scheme this was 5% or roughly equal to one more monthly payment.
i appreciate my bike is worth more than 5% after a year, and some people may regard this as unfair, but i didnt invent the scheme i just took up what was offered. and dont forget i have actually paid the full purchase price of the bike!
The FMV thing is imposed by tax rules: Your employer can't generally give you stuff without it being taxed as a benefit. Selling at less than a fair market value is effectively providing you a benefit.
If Cyclescheme were to sell at less than FMV, you'd be liable for income tax on the difference. In this respect, the HMRC guidelines are actually quite generous: they say that your employer can sell a 1 year old bike to you at 25% of its original cost and they won't ask any questions.
If you read the agreement carefully, you should find that buying the bike at the end of it isn't even an automatic entitlement. Any mention of price will be a description of what is typical, in the event that they let you buy it. What is typical has changed, because HMRC have made it clear that selling at less than FMV is a taxable benefit.
